AOL Mulls Other Options–As Time Warner Wearies of Yahoo Waiting Game

Here’s a joke an exec at AOL recently sent me:

Q: How many Yahoo and AOL dealmakers does it take to screw in a lightbulb?

A: None–you don’t need light if you’re never going to sign a merger agreement.

Ahahahaha. Ha.

Well, not really.

Time Warner (TWX) CEO Jeff Bewkes certainly was not laughing much Wednesday, discussing the options for the media giant’s long troubled online unit at a UBS investor conference.

Among the gems from Bewkes, according to paidContent: “I’d like to get it resolved, meaning clear…so AOL can be seen and valued…. We need to do it fairly soon and we’ve been working hard on it.”

Calling AOL what it is–a third-place player in the portal sector–Bewkes acknowledged the obvious, that it’s a tough road in all sorts of ways, especially in the all-important advertising market, “even though some excellent work is being done on cost cuts, programming and traffic.”

Indeed, especially compared to its erstwhile suitor Yahoo, AOL execs have been toiling mightily to cut while also innovating.

Earlier this week, for example, AOL unveiled interesting changes to its social-networking and communications assets.

But those efforts might be just spitting into the wind, of course, with no end in sight, as the company struggles to differentiate itself from the pack.

And while Bewkes mentioned alternatives at the UBS event–including with Google and Microsoft, as well as Yahoo and a possible spinoff of AOL–he still used a lot of mights and might-nots in his talk.

But sources close to the situation said Time Warner was actually very seriously looking at a variety of configurations to sell off pieces of AOL.

AOL’s owner, especially Bewkes, sources said, has become weary of all the uncertainty and lack of ability to complete a deal with Yahoo (YHOO), after months of trying, especially since Yahoo is still without a CEO and has just this week undergone wrenching layoffs.

“Yahoo has trouble making decisions in the good times, so you can imagine how it is now,” said one source.

So, according to people with knowledge of the situation, new ideas center around selling off the communications and advertising parts of AOL, as well as its access business (which has been long expected).

Obvious buyers for the communications unit, now called the Peoples Network, would be both Microsoft (MSFT) and Google (GOOG), which already owns five percent of the entire AOL unit.

The same is true for the advertising arm, now called Platform-A, which is perhaps AOL’s most lucrative asset.

But owning and running the lower-margin business, it is thought, is going to get increasingly hard as Microsoft and Google go for big scale.

That leaves the content properties, some of which are among the most trafficked on the Web, which could stay with Time Warner, either as a separate unit or as part of Time Inc.

The premium ad sales for the content could still be sold by using internal resources.

If that is done, it is even possible that Time Warner would retire the somewhat tired AOL brand name.

“We’re looking at all sorts of ways to make the most of this asset,” said one source. “After all, we can’t just wait for Yahoo to figure out what it wants to do.”

Indeed, it cannot.

Please see this disclosure related to me and Google.